Just as the Gulf economies have undergone dramatic changes in recent months, including the introduction of value added tax and fee increases, we too felt it was time to shake up our annual Salary Survey.
While the format has served us well over the years, and offered a unique insight into the compensation expats could expect for a number of key roles, it was increasingly apparent that the included positions were not entirely reflective of the job market as we move towards the end of the decade.
In addition, a focus on largely management roles meant it offered less insight for the majority of the workforce, who are further down the ladder.
Our new streamlined Salary Survey for 2018 aims to address these issues in a simplified format that should prove relevant for the years to come as the gaps between Asian, Arabic and Western
Among the most noticeable changes has been the inclusion of the new lower tier positions such as human resources executive, logistics executive, sales executive and receptionist.
This meant that the overall average monthly salary this year of $8,083 is 26.3 per cent lower than that seen last year, with some quite substantial differences in some countries.
For example, the Saudi average was down 34.21 per cent, the Kuwait average 27.73 per cent, the UAE average 26.74 per cent, while for Bahrain it was down 25.18 per cent and Oman 25.2 per cent.
The use of a single survey for expatriates rather than three split by Asian, Arabic and Western also meant salaries were down considerably for some positions but, interestingly, not all.
Towards the top of the table, the monthly average salary for an IT manager – compared to an average of the three expat groups from last year – was down 39.17 per cent from $12,430 to $7,561.
It was a similar story for the editor position, down 24.68 per cent from $6,535 to $4,922, and human resources manager position, down 23.85 per cent from $10,228 to $7,788.
However, the average salaries for our top two positions when compared in this format actually increased in 2018.
The average monthly salary of a CEO or managing director of a multinational company was up 2.95 per cent from $33,988 to $34,990 and that of a CEO/MD of a local company was up 13.25 per cent from $22,031 to $24,950.
This could be reflective of how an expatriate’s home country matters very little for the very top-tier positions.
Which country pays more?
Another notable change this year is the difference between the average salary in each country. Last year, the average Saudi salary at $13,011 was 13.63 per cent more than the UAE, 18.3 per cent more than Kuwait, 27.67 per cent more than Bahrain and 27.91 per cent more than Oman.
This year the Saudi average of $8,560 meant that gap closed to 2.9 per cent more than in the UAE, 8.4 per cent more than Bahrain, 8.7 per cent more than Oman and 8.96 per cent more than Kuwait.
Although this is not to say workers in the kingdom earn more in every single position.
For example, the average salary for a hotel general manager (a new role introduced in 2018) in Kuwait is $15,290 – 38 per cent higher than Saudi Arabia. Bahrain’s $14,240 is 31 per cent more. Interestingly for this category, the UAE is found to be the lowest paying country at $9,741 – likely reflecting the significant number of hotels in the country and a wider pool of staff to choose from.
At $11,130, the head teacher/principal role also pays more in Bahrain than any other country, up 2.7 per cent on Oman, 32.2 per cent on the UAE, 42.6 per cent on Saudi and 51.7 per cent on Kuwait, although this may have been a reflection of the different benefits paid outside of salary in each country.
Meanwhile, Kuwait pays the highest monthly salary on average for the healthcare general practitioner position – $5,150. This is a difference of 1.9 per cent with the UAE and Saudi, 7.2 per cent with Bahrain and 9.7 per cent with Oman.
Elsewhere, the UAE was found to be the top paying country for construction project managers ($8,912); 1.7 per cent more than Saudi, 6.97 per cent more than Kuwait, 11.88 per cent more than Oman and 13.1 per cent more than Bahrain.
For bank branch managers the emirates also paid significantly more at $6,122. This was 25.76 per cent higher than the same position in Saudi, 42.83 per cent higher than Bahrain, 45.3 per cent higher than Kuwait and a substantial 75.4 per cent higher than Oman.
And there was a noticeable difference in the UAE’s salary for editors ($5,667) against other countries: 9.1 per cent more than Saudi, 16.1 per cent more than Oman, 21 per cent more than Bahrain and 25.8 per cent more than Kuwait.
A less pronounced difference was seen for lawyers, with the $10,239 UAE figure up 2.3 per cent on Saudi, 14.5 per cent on Kuwait, 21.7 per cent on Oman and 22.9 per cent on Bahrain. Similarly for digital marketing specialists, with the UAE’s $4,493up 1.8 per cent on Saudi, 7.3 per cent on Bahrain, 9.4 per cent on Oman and 20 per cent on Kuwait.
Other interesting results came at the lower end of the table, with logistics executives in Oman ($3,453) found to command 0.7 per cent more than those in Bahrain, 9.2 per cent more than those in the UAE, 12.5 per cent more than those in the UAE and 20.4 per cent more than those in Kuwait.
Job trends and the impact of VAT
Outside of our main survey we asked the participants questions regarding salary and job trends and their expectations for the year ahead.
Suhail Masri, vice president of employer solutions at Bayt.com, said the company’s own research showed that small and medium enterprises in the private sector were expected to be the main driver for hiring in the coming months.
According to the firm’s own surveys, 76 per cent of companies in this category in the Middle East and North Africa will be hiring over the next three months and 89 per cent over the next year.
By industry, Bayt.com found that 81 per cent of consumer goods firms, 80 per cent of real estate/construction/property firms and 78 per cent of hospitality/recreation/entertainments firms are planning to hire over the next three months. This compared to 97 per cent of business consultancy/management firms, 95 per cent of consumer goods firms, 94 per cent of hospitality/recreation/entertainment firms, 93 per cent of banking/finance firms and 92 per cent of commerce/retail/trade firms planning to hire in the next year.
The most in-demand positions over the next three months, according to the firm’s February research, are junior executives (42 per cent), coordinators (31 per cent), and executives (28 per cent), while companies were also found to be looking to hire accountants (25 per cent), sales executives (18 per cent) and sales managers (16 per cent).
More broadly in the Gulf, Masri says the introduction of a 5 per cent value added tax rate should demand for related professionals.
“Given the introduction of the VAT tax system in the GCC, it is fair to expect the number of jobs relating to finance and accounting to increase.
“Governments, accounting firms, and businesses will require the skills of specialised tax accountants who are competent in incremental and surplus-value-based taxation.”
Similarly, Michael Page Middle East managing director Leith Ramsay says value added tax experience is among the skill-sets in demand at the moment, alongside digital and mega projects.
However, the demand for tax specialists has not necessarily been as great as was imagined before the 5 per cent tax’s implementation in Saudi Arabia and the UAE on January 1, according to another of our respondents.
Nadia director Ian Giulianotti says positions in demand at the firm has been consistent, particularly at the junior level led by secretaries and logistics staff at the junior level. But despite an anticipated surge in demand for tax personnel in 2017, with a flood of European, Australian and South African VAT specialists predicted, this has yet to materialise.
“We thought that with VAT coming in there would be an influx of VAT specialists. There have been some but not the numbers that we expected, and it certainly hasn’t had the effect we expected on salaries or people that have VAT experience,” he says.
Similarly, in the Gulf countries yet to implement the regional tax – Bahrain, Kuwait and Oman – Giulianotti says demand for tax specialists from companies has yet to emerge, although there is still time with the latter aiming for an early 2019 implementation date.
Another area where VAT does not appear to be having an impact is on salaries themselves, according to Ramsay, who says firms have generally not factored the tax into pay rises.
“Most organisations did not factor in VAT into annual salary increases. The logic being the benefit of living with zero income tax is far greater than the introduction of VAT,” he indicates.
Reforms and regulatory changes
Outside of VAT, a number of other factors linked to both government legislation and market demands are expected to impact the job market in the coming months.
In the UAE, one key example is the introduction of a good conduct certificate requirement for work visa applicants on February 4. Under the scheme, expats had to present a certificate from the police force or government for each of the countries they have resided in over the last five years, although a document from a local UAE police force would reportedly suffice for those that already have work visas and are switching jobs.
The Ministry of Human Resources and Emiratisation suspended the scheme on April 1 due to concerns it was delaying the hiring process, but it is expected to return at a later date.
Bayt.com’s Masri says he does not believe the new requirement will affect the UAE’s attractiveness as a job market but he does think it will be a factor job seekers take into account before making a move to the country.
“While we don’t believe that the new good conduct certificate requirement is going to impact the attractiveness of the UAE job market, it does mean that job seekers looking to relocate to the UAE must take into account this extra step and keep in mind that they must proactively prepare the documents they need before they embark on a new career.”
Meanwhile, Giulianotti suggests that the document could present the most complications for people that are visiting the UAE on a tourist visa with the intention of finding a job given how difficult it can be to obtain from abroad.
“For people in a hurry or employers that want an immediate replacement or want someone within four weeks they are probably going to turn to hiring people that are experienced and are in the UAE. That may cause a slight climb in the market in terms of market rates,” he suggests.
Elsewhere, Michael Page’s Ramsay suggests the requirement “will not be an issue” and should not impact the UAE’s attractiveness for workers.
Another consideration for those seeking work in Saudi Arabia will be a SAR100 ($27) monthly fee introduced last July for each dependent of a foreign worker that will increase to SAR200 ($53) this year. Giulianotti believes this will not impact the country’s appeal for skilled workers, who are compensated with higher salaries in the kingdom than the other regional countries due to the greater restrictions they face there. But there may be some impact on workers at the lower end of the market.
“There is a mind-set there that ‘I’m going to be there for three years, save everything I can and then in three years’ time I’m going to go home and buy a house or another financial goal’. That won’t change. It will still be that same pool of people that are going to go to Saudi Arabia,” he argues.
“The problems in Saudi Arabia are not at a skill-based level but a lower level – people that are mechanics, or working in restaurants and cafes. That’s where it’s going to be harder and harder to find people.”
On the upside, the kingdom’s reforms, including plans to privatise state assets, attract foreign investment, and diversify the economy, are creating opportunities in other areas.
Michael Page’s Ramsay says these factors mean the kingdom is a major driver for regional hiring.
“Saudi Arabia is going through a huge transformation and is driving a significant amount of the regional hiring,” he says.
Similarly, the managing director suggests that while there has been increased pressure from financial regulators on firms – including banks – to pay more attention to changes, this has created job opportunities for well-qualified legal and compliance professionals with experience in markets like the UK, Europe and Singapore.
“The effect on salaries has been felt less, with salaries for regulatory professionals being offered at similar levels to 2017,” he suggests.
“But this should be taken as a positive. In other divisions such as operations and finance, for example, salaries being offered are at a lesser amount to previous years – 10-15 per cent in some cases.”
Regardless of these negative and positive influences, our participating companies continue to view the Gulf region as an attractive place to work as a whole.
Bayt’s Masri says regional countries continue to score well on several factors including economic, environmental, standard of living, socio-cultural and entrepreneurship in the company’s surveys and Ramsay argues the transformation underway in regional countries makes it an attractive market.
“The Middle East’s overall transformation is an attractive option for career-minded expats, especially in sectors like real estate, construction, infrastructure and banking,” he says.
“In addition, the quality of life remains very high – safety, domestic help, world class schools, healthcare and proximity for global travel are all big advantages.”
The earning potential in the region has also been backed by recent reports including one from property firm Knight Frank, which ranked Abu Dhabi, Dubai, Riyadh and Jeddah from 11th to 14th globally for the number of households earning more than $250,000.
But Nadia’s Giulianotti also cautions that the region’s attractiveness should always be considered in the context of workers’ home markets.
This is particularly the case for the region’s largest expat group, Indian nationals, who total some 8.9 million people across the GCC, according to the United Nations’ 2017 International Migration Report.
“For the past two years we’ve seen more Indians going back to India than arriving in the Gulf and what more and more of our customers who do direct recruitment in India are finding is it’s harder to harder to attract good talent,” he says.
“The average pay rise in India last year for middle management was between 12 and 14 per cent and India is booming. So a lot of people are taking the opportunity and weighing up the rising cost of living in the UAE and the better opportunities available in India at the moment.”
This cost of living consideration is expected to be a key factor in the UAE and Saudi Arabia this year as consumers face higher prices for essentials following the introduction of value added tax.
Consumer price inflation in January, the month the tax was implemented, rose from 2.7 per cent to 4.8 per cent in the UAE and to 3 per cent in Saudi, but Giulianotti has lowered expectations for pay rises due to the decreasing cost of rents.
Nadia predicted an average pay rise of 5 per cent in the UAE last year but in reality found it was closer to 2-3 per cent. Following this, Giulianotti now says he has lowered his previous 2018 forecast of a 10 per cent pay rise because the damp rent market in the emirates is acting as a counterweight to other cost of living increases. The firm’s new forecast is an average pay rise of 5-6 per cent this year.
“On one hand we’ve got rents coming down but on the other hand we’ve got
costs going up, so there is a fine balance there,” he suggests.
Michael Page’s Ramsay is a little less optimistic, suggesting the average rise will vary from sector to sector but “will be in the region of 2-3 per cent”.
Masri does not give a forecast but notes that 73.2 per cent of respondents to the firm’s job confidence index expect their salary to get better or stay the same over the next six months, compared to 16.5 per cent who believe it will get worse.
All suggesting that while workers may not get the double-digit pay rise they were hoping for this year, there will at least be an increase in compensation to look forward to.
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How we did it
Recruitment firms were asked to fill in their average salaries for each of the positions in the respective Gulf countries. In the instance where they did not have any data they left the box blank. The average of these inputs was then calculated and put together and displayed in the 2018 survey to give a broad insight of compensation across the GCC.